Emphasizing the role of energy efficiency in the energy market debateMedia Release

Aug 08, 2012 - 10:59am

Renewed attention on energy efficiency and long-term horizons is needed as the nation debates energy market reform, The Climate Institute said today.

“As our political leaders debate how to address rising energy prices, a keen focus is needed on one of the most effective tools other nations have used to manage their rising energy costs – improving energy efficiency,” said John Connor, CEO of The Climate Institute.

“The era of cheap energy is over. Australia can also no longer expect to be insulated from rising global prices for resources like coal, oil, gas and carbon. Domestically, expensive investment in electricity network infrastructure, driven by rising peak demand, is contributing to steep increases in power bills.”

“Improved energy efficiency is vital to managing energy bills, maintaining Australia’s competitiveness and building resilience to all the global and domestic economic forces that are driving up energy costs.”

The proposed national Energy Savings Initiative (ESI) – currently under consideration by State and Federal governments - is a critical component of this objective. The ESI would build on the existing schemes in New South Wales, Victoria and South Australia that are helping businesses and households improve energy efficiency and create a national obligation on energy companies to help consumers save energy.

“A national ESI would create a financial incentive for energy retailers to educate their customers on how to reduce their energy consumption by obligating them to do so,” Connor said. “It also allows them to make money out of reducing customers’ bills by making reducing energy a real financial product.”

Estimates suggest households could save $90-300 per year by 2020 and medium-sized businesses could save $10,000-23,700 per year under an ESI. By further reducing energy demand, it also saves on longer-term network infrastructure investments that at the moment are the main driver behind cost increases.

“Addressing the short-term drivers of energy costs is critical but we also can’t ignore the long-term drivers,” Connor said. “A national Energy Savings Initiative can help households and businesses investing in energy saving technologies that will reduce the impact of ongoing rising energy bills for decades to come.”

Other policies that reduce the cost of reducing pollution and clean energy are also important to managing a cost effective transition to the clean energy economy.

As noted by researchers from the International Energy Agency, a pollution price by itself will not fully drive the necessary transition to clean energy at least cost. A combination of energy efficiency policies, the Renewable Energy Target and policies to promote the early uptake of emerging, low-pollution technologies are critical to building low carbon prosperity. Working together, these complementary policies reduce costs by deferring unnecessary infrastructure investments, fast-tracking market experience and innovation, and by making clean energy cheaper.